Camille Faivre brings a seasoned perspective to the shifting tides of higher education. With her deep background in education management and a sharp focus on helping institutions pivot toward sustainable e-learning and open-program development, she has witnessed firsthand the tension between tradition and innovation. In a post-pandemic world where the “silver bullet” of online expansion is losing its luster, Camille provides a grounded, data-driven voice for leaders trying to navigate the complexities of enrollment and institutional health. Our discussion explores the “subsidy trap” currently catching many small colleges—the tendency to chase volatile auxiliary markets like adult learners and international graduate programs at the expense of their core residential missions. We delve into the shifting landscape of Online Program Management (OPM), the surprising resilience of the traditional undergraduate model, and the critical need for financial transparency when balancing innovation with the maintenance of a school’s unique, relationship-driven value proposition.
Adult learner enrollment at private four-year schools recently dropped by nearly 30%, signaling a decade-long contraction. Why are institutions still prioritizing this market despite these trends, and what specific fiscal risks do they face when these programs fail to meet enrollment projections?
The persistence in targeting adult learners stems from an old playbook that views this demographic as a quick fix for revenue gaps, but the data tells a much harsher story. We saw adult learner enrollment at private four-year institutions plummet by 28% year-over-year in Fall 2025, which isn’t just a blip; it is part of a decade-long slide from 1.5 million students in 2013 down to 1.2 million in 2023. Institutions prioritize this market because the logic of “building around the core” feels safer than the hard work of “fixing the core,” even when the demand isn’t there. The fiscal risks are devastating because these schools often take out internal loans or redirect vital funds to launch these programs, and when they miss projections, they are left with a weakened residential infrastructure and a new, expensive program that can’t even cover its own marketing costs. This creates a “subsidy trap” where the core undergraduate mission ends up starving to fund a failing auxiliary experiment.
Online participation rates and international graduate enrollment are both experiencing notable reversals after years of growth. How does this volatility impact long-term financial planning, and what are the step-by-step consequences for a small college that has over-invested in these auxiliary revenue streams?
Volatility is the enemy of the small college budget, and we are seeing it hit from two sides as online participation rates fell from 59% to 53% recently, while international graduate enrollment dropped by 5.9%. For a small college, the first consequence of over-investment is the “resource drain,” where marketing budgets for traditional programs are cannibalized to chase a shrinking international pool that had previously grown by 50% since 2020. Secondly, as these volatile streams dry up, the institution faces a sudden “liquidity crunch” because graduate programs are hyper-sensitive to economic cycles and policy changes. Finally, the school often finds itself in a “strategic drift,” having lost its competitive edge in the local residential market because it was too busy trying to compete globally against massive online players. It is a recipe for institutional fragility rather than the diversification they intended.
The infrastructure for online program management is shrinking, with over 140 contracts terminated recently and marketing costs rising. What metrics should leaders use to evaluate if a partnership is still viable, and how can they transition away from high-cost models without losing market share?
When 147 OPM contracts are terminated in a single year and new partnerships drop by 53%, it’s a clear signal that the high-cost revenue-share model is breaking. Leaders need to look past top-line enrollment and focus on “net contribution per student” after marketing and management fees are stripped away. If the marketing costs are rising while the margins are thinning, the partnership is likely a liability rather than an asset. Transitioning away requires a “phased insourcing” approach, where the college builds internal capabilities for student support and regional marketing while sunsetting the high-cost external contracts. This allows the school to maintain its local presence and market share without handing over 50% or more of its tuition revenue to a third-party provider that no longer offers a unique advantage.
While auxiliary markets fluctuate, residential undergraduate enrollment at small private colleges has remained relatively stable. What specific internal investments can strengthen this core experience, and how can schools leverage their community-based advantages to differentiate themselves from larger, less personal competitors?
It is fascinating to see that while other markets are in freefall, private nonprofit four-year institutions only saw a modest 1.6% decline in residential undergraduate enrollment. This stability suggests that the core model isn’t broken, but it is often underfunded; schools should be investing in faculty-student research, modernizing residence halls, and enhancing the immersive, relationship-driven learning that large online entities simply cannot replicate. By doubling down on the “defined community” aspect, a small college differentiates itself from the “anonymous” experience of a large state school or a fully online program. These are regional, relationship-based assets that are structurally difficult for competitors to copy, and they should be the primary focus of strategic investment. We need to stop treating the residential model as a legacy to be managed and start treating it as the primary engine of institutional health.
Strategy often shifts resources away from the residential model to fund new graduate or certificate programs. How can administrators identify when an auxiliary program is actually draining the core budget, and what are the specific indicators of a healthy balance between innovation and core maintenance?
The most obvious indicator of a budget drain is when the “cost to acquire” a student in a new certificate or graduate program exceeds the net revenue that student brings in over their first year. Administrators should look for “deferred maintenance spikes” or “stagnant faculty salaries” in the residential core as red flags that innovation is being funded by neglect. A healthy balance is achieved when auxiliary programs are “revenue-positive” within a strict 24-month window and contribute a clear percentage back to the general fund for core maintenance. If an auxiliary program requires a perpetual subsidy from undergraduate tuition just to keep its doors open, it isn’t an innovation—it’s a parasite. True sustainability comes from ensuring the core is robust enough to experiment, rather than experimenting because the core is failing.
What is your forecast for the small residential college model?
I believe we will see a “great refocusing” where the most successful small colleges stop trying to be everything to everyone and return to their roots as high-touch, community-centered institutions. The data shows that the national, fully online, and adult markets are becoming a “winner-take-all” game dominated by massive players with huge marketing budgets, which leaves a beautiful opening for small schools to reclaim their regional dominance. My forecast is that the institutions that survive and thrive will be those that view their residential undergraduate program not as a burden to be subsidized, but as their most defensible and valuable asset. We will see fewer new graduate launches and more investment in the physical campus and faculty-led experiences, leading to a leaner but far more resilient sector that thrives on deep local relationships rather than volatile global trends.
